Constellation Brands recently announced the full redemption of certain senior notes, a move reflecting its sound debt management strategies. Over the last quarter, the company's stock price remained relatively flat compared to the broader market's 2% climb last week and 12% increase over the past year. This steady performance, despite Constellation's proactive financial decisions and new product launches, aligns with its ongoing business activities. Factors such as the share repurchase program and executive changes may have provided additional context, but overall, the company's performance did not deviate significantly from broader market trends.

Every company has risks, and we've spotted 2 warning signs for Constellation Brands you should know about.

This technology could replace computers: discover the 22 stocks are working to make quantum computing a reality.

As Constellation Brands completes the full redemption of certain senior notes, it emphasizes the company's effective debt management strategies, potentially bolstering investor confidence. Over a longer-term period of five years, the company's total shareholder return, including share price and dividends, was 1.18%. This contrasts sharply with the broader market's 11.9% climb over the past year, but signals a more stable path than the 4.5% decline observed in the US Beverage industry over the same one-year period. Such context may adjust investor expectations regarding the company's relative performance.

The newly announced financial moves, combined with an active share repurchase program, underscore management's belief in the undervaluation of its shares, despite current challenges. With the share price recently at US$187.07, this is still 13.4% below the consensus price target of US$216.09. While restructuring in the Wine & Spirits segment and investment in expansion indicate a push for long-term growth, near-term revenue and earnings forecasts might remain pressured by external challenges like tariffs and inflation.

In summary, while the company's forecasted turnaround is promising, highlighted by potential future earnings of $2.4 billion and projected cost savings, immediate impacts on revenue and earnings due to macroeconomic pressures should be monitored closely. The fair value estimates suggest potential upside, but such projections rely heavily on anticipated improvements in margins and revenue growth as outlined in future plans.

Our comprehensive valuation report raises the possibility that Constellation Brands is priced lower than what may be justified by its financials.